Ag markets diverged before the weekend

Talk about diminished ethanol demand undercut corn prices again Friday. The EPA is reportedly ready to rule that the blend wall on U.S. gasoline consumption will force it to lower the amount of ethanol to be produced under the congressional mandate. That holds bearish connotations for the long-term corn outlook. As one would expect, corn futures slipped in response. December corn futures close 5.0 cents lower at $4.3325/bushel Friday, while May lost 5.0 cents to $4.545.

The soy complex also ended the week lower. Talk of an EPA cut to the ethanol mandate suggests the drive toward renewable fuels is waning, which could be a negative factor for the soyoil outlook. Persistent chatter highlighting good harvest progress and surprisingly high yields also may have depressed prices. The drop probably had a substantial technical component as well. November soybeans dove 21.25 cents to $12.6675/bushel to end the week, and December soyoil plunged 0.94 cents to 40.28 cents/pound, while December soymeal lost $6.2 to $403.4/ton.

Wheat futures posted impressive gains Friday. Despite concurrent corn and soy losses, wheat futures rose significantly today. Some wire service reports were quick to cite crop problems in Russia, Ukraine and Argentina, but that’s rather stale information. News of a regular Japanese tender may also have supported prices. We suspect short covering and technical considerations helped power the rise. December CBOT wheat surged 6.75 cents to $6.9225/bushel at its Friday settlement, while December KCBT wheat advanced 4.75 cents to $7.6025, and December MGE futures rallied 3.75 cents to $7.5475.

Talk of cash strength boosted cattle futures Friday. CME traders were reportedly expecting country cattle to trade at steady-higher levels Friday evening. However, bulls could probably weren’t happy that no demands have been made on the deliveries posted against expiring October futures during the week; that suggests poor packer demand for cattle. December cattle futures climbed 0.30 cents to 132.47 cents/pound as CME trading wound down for the week, while April added 0.32 to 135.27. Meanwhile, November feeder cattle jumped 1.35 cents to 169.27 cents/pound, and January ran up 0.92 to 168.75.

The hog market moved mostly lower to end the week. Stock index gains appeared to support nearby hog futures Friday, with ideas of relatively tight supplies probably encouraging bulls as well. However, growing anticipation of a fall surge in hog supplies may have caused the swine industry to rethink its optimism about the 2014 outlook. Deferred futures seemingly suffered as a consequence. December hog futures settled 0.15 cents lower at 86.50 cents/pound Friday afternoon, while April dropped 0.20 cents to 89.85.

Renewed equity strength seems to supporting cotton prices. There has been little market-moving cotton news lately. Consequently, ICE traders were apparently buying the market in reaction to the late-week equity rally, which implies improved apparel demand down the road. December cotton rose 0.20 cents to 83.37 cents/pound at its Friday close, while March gained 0.21 to 84.22.